Institutional investment taking over the property market
Institutional investment into residential assets is set to increase 65% this year compared to 2021, according to a recent survey.
The property consultancy, in its Residential Investment Report 2022, says its survey of 54 institutional investors suggested a surge of investment was heading into the sector this year.
The 54 investors said they plan to invest £16.5bn in residential in 2022, a 65% increase on the £10.2bn spent in 2021. Estimates from a recent survey covers 60% of the investment market, meaning the total spent this year could be more than £23bn.
The survey respondents plan to invest £75bn in the sector over the next five years, which rises to more than £100bn when taking into account the whole market.
It said: “Demand is driven by a combination of strong structurally supportive market dynamics, an evolving service-focused product, as well as an expanding and more discerning occupier base.
The report said “there is little doubt covid-19 has changed the way global institutional investors look at real estate.”
“The residential investment sector has proven resilient by delivering secure income in uncertain economic conditions,” it said.
The report also suggested a boom in the next few years in investment into later living housing. While 31% of investors surveyed are currently putting money into housing for older people, 67% expect to invest in the sector in the next five years.
It said: “Given the significant imbalance of supply and existing demand, on top of the ageing population and requirement of flexibility from this demographic, this presents a significant opportunity for institutional investors.”
The percentage of investors putting money into build-to-rent is expected to grow from 80.8% to 84.5% within five years, while student housing is expected to grow from 61.15% to 63.5%.
Comment
The volume of property coming to market over the last few years, is approximately running at 60% of just twenty years ago, but why is that? As this survey indicates, the proportion of institutional investors entering the market has increased significantly in recent years, with the total sales volume of homes sold in 2021 being bought by institutional investors breaking 15%.
As more and more property falls in to the hands of these corporations, there is less and less available for individuals. Only recently, Lloyds announced its intention to become the UK’s largest landlord by 2025.
If this continues, what will happen when as there are less and less private homes available? Will this not simply leave more and more people with no option but to rent.
“You will own nothing and be happy”
Really? We need to wake up and smell the coffee, before we reach the point where we have no option but to capitulate to the demands of the corporations and the government, or find ourselves locked-out from some of our most fundamental rights, of which housing is just the start.